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Happy Holidays From Market Folly

We just wanted to wish our readers a safe and enjoyable holiday season! Spend some time with those you love and remember there's more to life than the markets (well, most of the time).

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HAPPY HOLIDAYS!

Maverick Capital Acquires Bluefly (BFLY) Common Stock

In a Form 4 filed with the SEC, Lee Ainslie's hedge fund Maverick Capital has updated their position in Bluefly (BFLY). On December 21st, Maverick acquired 665,471 shares through a series of convertible promissory notes. They received these shares at $1.70 and they now own 3,704,101 shares.

Ainslie's hedge fund already owned BFLY and this is an increase in their common stock holdings as the last share total we saw out of Maverick was from their 13F filing where they owned 3,038,628 shares as of September 30th, 2009. To see what else Ainslie holds, we recently detailed Maverick's portfolio holdings. Maverick is an $8+ billion long/short equity hedge fund firm focused on stockpicking.

Additionally, we see that Quantum Industrial Partners have also exchanged convertible promissory notes on Bluefly. Quantum is a subsidiary of George Soros hedge fund firm Soros Fund Management. According to their form 4 filing with the SEC, they also acquired 1,064,400 shares at $1.70. You can view the rest of Soros Fund Management's recent portfolio adjustments.

Taken from Google Finance, Bluefly is "an online retailer of designer brands, fashion trends and superior value. During the year ended December 31, 2008, the Company offered over 50,000 different styles for sale in categories, such as men’s, women’s and accessories, as well as house and home accessories from over 350 brands at discounts."

Warren Buffett Sells Moody's (MCO) Shares... Again

Warren Buffett's Berkshire Hathaway has sold shares of Moody's (MCO) for the sixth time since July. We've covered Buffett's previous sales and now Berkshire has sold 87,992 shares on December 18th at a price of $26.77 per share. While they've been selling numerous times this year, they still remain Moody's largest shareholder and still own 31,814,610 shares. Berkshire sold shares in early December, previously sold Moody's shares in late October, and in months prior as well.

It has become clear that Buffett at the very least wants to reduce the size of his position. However, some will ponder whether or not Buffett will completely sell out of the name given the frequency of his sales thus far. Unfortunately we'll have to wait and see for the verdict on that one. Given that Buffett has been selling every time Moody's shares reach the mid-to-high 20's, he could potentially just be looking for the right price. Someone who will undoubtedly be fond of these developments is David Einhorn. His hedge fund Greenlight Capital has been publicly short Moody's (MCO) as well as McGraw Hill (MHP) in a bet against the ratings agencies. You can see Einhorn's short thesis in his presentation on the curse of the Triple-A.

Taken from Google Finance, Moody's is "a provider of credit ratings and related research, data and analytical tools, quantitative credit risk measures, risk scoring software, and credit portfolio management solutions and securities pricing software and valuation models. The Company operates in two segments: Moody’s Investors Service (MIS) and Moody’s Analytics (MA)."

What We're Reading ~ 12/24/09

Hedge fund Appaloosa & David Tepper's next bet: CMBS [Wall Street Journal]

Bespoke's 2010 financial blog roundtable [Bespoke]

In good fun: 20 unpredictions for 2010 [The Reformed Broker] and eight predictions for 2010 [Daily Options Report]


Steve Cohen... On a talk show [Dealbreaker]

And speaking of Dealbreaker, here's a piece on editor Bess Levin from 'insurgents of 2010' [New York Observer]

Gold beats all in a decade of fear and greed [Bloomberg]

John Griffin's Hedge Fund Blue Ridge Capital Fancies JPMorgan Chase (JPM)

This is the third quarter 2009 edition of our hedge fund portfolio tracking series. If you're unfamiliar with tracking hedge fund movements or SEC filings, check out our series preface on hedge fund 13F filings.

Next up in our series is John Griffin's hedge fund firm Blue Ridge Capital. Blue Ridge seeks absolute returns by investing in companies who dominate their industries and shorting the companies who have fundamental problems. Both Griffin at Blue Ridge and Lee Ainslie over at Maverick Capital like to effectively hedge with a solid balance of both long and short positions (like a true hedge fund... not like some of the crazy funds these days that aren't truly hedged).

Griffin graduated from the University of Virginia and received his MBA from Stanford. And, like many other hedge funds we cover on the site, Griffin is a 'Tiger Cub' as he previously plied his trade under Julian Robertson as his former right hand man at Tiger Management. For more on how to think and analyze like Griffin and Blue Ridge, check out their recommended reading lists. They've laid out their top reads in four categories presented below:

- Behavioral Finance reading
- Analytical recommended reads
- Economics recommendations
- Historical/Biographical recommendations

Keep in mind that the positions listed below were Blue Ridge's long equity, note, and options holdings as of September 30th, 2009 as filed with the SEC. We don't cover every single portfolio maneuver, as we instead focus on all the big moves. All holdings are common stock unless otherwise denoted.


Some New Positions
Brand new positions that they initiated last quarter:
JPMorgan Chase (JPM)
Market Vectors Gold Miners (GDX)
Dollar Tree (DLTR)
Equinix (EQIX)
Pennymac Mortgage (PMT) ~ we detailed this position previously when they first revealed it


Some Increased Positions
Positions they already owned but added shares to:
Range Resources (RRC): Increased by 174.7%
Express Scripts (ESRX): Increased by 147.4%
Western Union (WU): Increased by 105.4%
Monsanto (MON): Increased by 97.3%
iShares Silver Trust (SLV): Increased by 95.9%
Palm (PALM): Increased by 74%
Crown Castle (CCI): Increased by 61.3%
American Capital (ACAS): Increased by 27.5%
Amazon (AMZN): Increased by 31.7%


Some Reduced Positions
Stakes they sold shares in but still own:
RenaissanceRe (RNR): Reduced position by 75.3%
Broadridge Financial (BR): Reduced by 70.4%
Apple (AAPL): Reduced by 31.2%
Berkshire Hathaway (BRK.A): Reduced by 18.5%


Removed Positions
Positions they sold out of completely:
Schering Plough (SGP)
Vale (VALE)
National Oilwell Varco (NOV)
State Street (STT)
Charles Schwab (SCHW)
Partnerre (PRE)
Agnico Eagle Mines (AEM)
VMWare (VMW)
Axis Cap (AXS)
Goldcorp (GG)
Newmont Mining (NEM)
Yamana Gold (AUY)
Harley Davidson (HOG)
Wells Fargo (WFC)
Novagold (NG)
Direxion Financial Bear 3x (FAZ)


Top 15 Holdings by percentage of assets reported on 13F filing

1. Apple (AAPL): 5.83%
2. JPMorgan Chase (JPM): 5.75%
3. Pfizer (PFE): 5.68%
4. Amazon (AMZN): 5.36%
5. Western Union (WU): 5.26%
6. Crown Castle (CCI): 4.92%
7. Millipore (MIL): 4.81%
8. CME Group (CME): 4.58%
9. Microsoft (MSFT): 4.29%
10. Thermo Fisher Scientific (TMO): 4.25%
11. Blackrock (BLK): 4.17%
12. Visa (V): 4.04%
13. Discovery Communications (DISCA): 3.47%
14. Express Scripts (ESRX): 3.36%
15. Covanta (CVA): 3.33%
    

The main portfolio change to make note of was their brand new stake in JPMorgan Chase (JPM) which they brought all the way up to their second largest holding at 5.75% of their reported longs. The trade in hedge fund land has been long moneycenter banks and short regional banks for some time and this position sticks to that theme. Additionally, Blue Ridge's stake in Apple (AAPL) is quite sizable. Even though they sold off a third of their position, it still remains their top holding at 5.83% of their holdings.

John Griffin's hedge fund also boosted their holdings in Express Scripts which is notable since many other Tiger Cub portfolios own this name including Andreas Halvorsen's Viking Global. And while their brand new stake in Equinix (EQIX) only landed at their 26th largest holding, we highlight this because we've seen numerous hedge funds accumulating shares over the past few quarters and will have to see if they added more in the fourth quarter.

One other change we want to highlight Blue Ridge's fifth largest holding of Western Union (WU). While we've seen many hedge funds prefer payment processors that bear no credit risk such as Visa and Mastercard. Blue Ridge has taken a slightly different path here by playing a global money transfer company, a position they doubled down on in the third quarter. Blue Ridge also owns Visa at their 12th largest holding.

Lastly, we see they sold completely out of various gold miners and replaced those stakes with a single position in the Market Vectors Gold Miners exchange traded fund (GDX). So it seems they favored a pre-made basket via ETF instead of creating their own assembly of holdings. That pretty much wraps up the major changes in their portfolio this time around. To learn to invest like John Griffin, check out hedge fund Blue Ridge's recommended reading list.

Below you'll find graphical representations of the recent shifts in Blue Ridge Capital's portfolio courtesy of Drew Robertson at Financial Research Station:

(click to enlarge)

(click to enlarge)

Assets from the collective holdings reported to the SEC via 13F filing were $4.4 billion this quarter compared to $3.9 billion last quarter. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. Also, please again note that these positions were as of September 30th so two months have elapsed and they've undoubtedly shifted around their portfolio since then.

This is just one of the 40+ prominent funds that we'll be covering in our Q3 2009 hedge fund portfolio series. We've already covered Seth Klarman's Baupost Group Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Dan Loeb's Third Point LLC, David Einhorn's Greenlight Capital, John Paulson's firm Paulson & Co, Lee Ainslie's Maverick Capital, Andreas Halvorsen's Viking Global, Chase Coleman's Tiger Global and Brett Barakett's Tremblant Capital. Check back daily as we'll be covering new hedge fund portfolios.

Brett Barakett's Tremblant Capital: Large Research in Motion (RIMM) Exposure

This is the third quarter 2009 edition of our hedge fund portfolio tracking series. If you're unfamiliar with tracking hedge fund movements or SEC filings, check out our series preface on hedge fund 13F filings.

Next up in our series is Brett Barakett's hedge fund Tremblant Capital. The name Barakett might ring a bell because his brother Timothy used to run fellow hedge fund Atticus Capital (who recently announced they'd be shutting down). So while Timothy may have stepped away from the hedge fund game, Brett is still going at it. Before founding his own firm, Brett was previously a portfolio manager for Louis Bacon's hedge fund Moore Capital and in his spare time he enjoys ice hockey. Taken from their site, Tremblant Capital Group's objective is "to achieve superior risk adjust returns for our investors through our focused and disciplined investment process." The only major notable portfolio activity out of Tremblant has been their 13G filing on IMAX.

Keep in mind that the positions listed below were Tremblant's long equity, note, and options holdings as of September 30th, 2009 as filed with the SEC. We don't cover every single portfolio maneuver, as we instead focus on all the big moves. All holdings are common stock unless otherwise denoted.


Some New Positions
Brand new positions that they initiated last quarter:
Qualcomm (QCOM) Calls
Procter and Gamble (PG) Calls
Wynn Resorts (WYNN) Puts
Union Pacific (UNP) Puts
Monsanto (MON)
DirecTV (DTV) Calls
Apollo Group (APOL)
Viacom (VIA-B) Puts


Some Increased Positions
Positions they already owned but added shares to:
Imax Corp (IMAX): Increased position by 187.7% (we previously detailed this)
Mastercard (MA) Puts: Increased by 115.2%
Melco Crown (MPEL) Calls: Increased by 45.9%
Green Mountain Coffee Roasters (GMCR): Increased by 42%
Walmart (WMT): Increased by 38.5%
Cheesecake Factory (CAKE): Increased by 36%
Intel (INTC) Puts: Increased by 34%
Liberty Media (LINTA): Increased by 27.3%
Charles Schwab (SCHW): Increased by 24.6%


Some Reduced Positions
Stakes they sold shares in but still own:
Red Hat (RHT) Calls: Reduced by 70.2%
Apple (AAPL) Puts: Reduced by 63.7%
RedHat (RHT): Reduced by 45.7%
Google (GOOG): Reduced by 43.5%
Melco Crown (MPEL): Reduced by 35.7%
Icon (ICLR): Reduced by 35.7%
Eclipsys (ECLP): Reduced by 31.7%
Hologic (HOLX): Reduced by 29.8%
Baidu (BIDU): Reduced by 26.8%
Costco (COST): Reduced by 24.8%
Apple (AAPL): Reduced by 24.4%
Qualcomm (QCOM): Reduced by 22.2%


Removed Positions
Positions they sold out of completely:
Apple (AAPL) Calls
Amazon (AMZN) Puts
Qualcomm (QCOM) Puts
Canadian Natural Resources (CNQ)
AU Optronics (AUO) Puts
Hologic (HOLX) Puts
Catalyst Health (CHSI)
Research in Motion (RIMM) Puts
Symantec (SYMC)
Bankrate (RATE)
Weingarten Realty (WRI)
MGM Mirage (MGM) Calls
Las Vegas Sands (LVS) Calls
MEMC Electronics (WFR)
Wynn Resorts (WYNN) Calls
Gannett (GCI) Calls
Harley Davidson (HOG) Calls
Commscope (CTV)
Sequenom (SQNM)


Top 15 Holdings by percentage of assets reported on 13F filing

1. Research in Motion (RIMM) Calls: 8.7%
2. Qualcomm (QCOM) Calls: 5.43%
3. Procter and Gamble (PG): 5.08%
4. Procter and Gamble (PG) Calls: 4.94%
5. Visa (V): 3.21%
6. Walmart (WMT): 2.9%
7. Mastercard (MA): 2.87%
8. Research in Motion (RIMM): 2.7%
9. Apple (AAPL): 2.5%
10. Hologic (HOLX): 2.29%
11. Baidu (BIDU): 2.19%
12. Mastercard (MA) Puts: 2.12%
13. Melco Crown (MPEL): 2.08%
14. Visa (V) Calls: 1.97%
15. Green Mountain Coffee Roasters (GMCR): 1.95%
    

Tremblant was out reducing technology exposure across the board as it was previously almost 49% of their long US equity holdings. While they were moving out of that sector, they were moving into consumer goods as around 18% of their longs are in that sector now. The tough thing to decipher about their portfolio is their net position in a given name. As you can see above, they hold a bevy of puts and calls in addition to the underlying common in many stocks. As such, we do not have access to the strike prices or expirations of those options so it's hard to tell if they are net bullish or net bearish on some of their positions.

By far and away their largest position though is calls in Research in Motion (RIMM) and this carries over from the second quarter where it was their largest stake then as well. Their second largest holding is a brand new position in Qualcomm (QCOM) calls which is notable. So while they were reducing tech exposure, don't get us wrong... they definitely still have tech positions.

Below are some graphical illustrations of the changes made to Tremblant Capital's portfolio courtesy of Drew Robertson at Financial Research Station:

(click to enlarge)

(click to enlarge)

Assets from the collective holdings reported to the SEC via 13F filing were $3 billion this quarter compared to $2.7 billion last quarter. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. Also, please again note that these positions were as of September 30th so two months have elapsed and they've undoubtedly shifted around their portfolio since then.

This is just one of the 40+ prominent funds that we'll be covering in our Q3 2009 hedge fund portfolio series. We've already covered Seth Klarman's Baupost Group Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Dan Loeb's Third Point LLC, David Einhorn's Greenlight Capital, John Paulson's firm Paulson & Co, Lee Ainslie's Maverick Capital, Andreas Halvorsen's Viking Global, and Chase Coleman's Tiger Global. Check back daily as we'll be covering new hedge fund portfolios.

David Einhorn's Hedge Fund Greenlight Capital Unveils New Position

The London Stock Market News Service yesterday reported that David Einhorn's hedge fund Greenlight Capital has been busy yet again. Einhorn has started a brand new position in shares of F&C Asset Management (LSE: FCAM). They now own 16,450,119 shares which represents ownership of 3.4% of their shares outstanding. This is one of many positions Greenlight holds and you can view the rest of their portfolio here. For some macro insight from Greenlight Capital, check out their rationale behind storing physical gold.

Around the end of October, Einhorn's fund was up 30% year-to-date and had recouped all losses from last year. Greenlight is a $6 billion hedge fund that focuses on value investing with a focus on spin-offs and have seen solid annual returns of over 20%. To get a better idea as to how Greenlight constructs and researches their investment themes, we highly recommend checking out Einhorn's book Fooling Some of the People All of the Time: A Long Short Story. Typically, Greenlight approaches things by identifying mispricings in the markets and then proceeding from there.

Taken from Google Finance, F&C Asset Management plc (F&C) is "principally engaged in the business of asset management. F&C is an active international investor but with a client focus on the United Kingdom and Continental Europe. As of December 31, 2008, the Company had £98.6 billion of assets under management."

Bill Ackman's General Growth Properties Rebuttal: A Detailed Response To Hovde's Short Thesis

A week or so ago we posted up hedge fund Hovde Capital's short thesis on General Growth Properties (GGWPQ). Immediately following that, we saw Todd Sullivan over at ValuePlays.net issue a rebuttal. Hedge fund manager Whitney Tilson of T2 Partners also issued a rebuttal. And finally, you now have one of the largest shareholders in Bill Ackman issuing a rebuttal on behalf of his hedge fund Pershing Square Capital Management.

In summary, Ackman has provided a wide range of GGWPQ's equity value based upon fellow REIT valuations. He comes up with a price target of $24-43 per share which excludes the MPC segment of General Growth. He feels that high quality US malls will continue to do well and he even recently laid out an entire presentation on the US mall REIT industry. Ackman and Pershing Square are obviously refuting Hovde's presentation since they have been long the equity and unsecured debt of General Growth since back when the stock was trading below $0.40 per share. You can see Pershing Square's original GGWPQ presentation from when they first entered the name.

General Growth has been evaluating all options to reduce leverage and have been considering "all indications of interest in the company." Ackman sits on the board of General Growth and obviously has been very close to this entire situation.

Entitled 'A Detailed Response To Hovde's Short Thesis on General Growth Properties,' below you will find Pershing Square's entire presentation, with a big hat tip to Todd Sullivan's ValuePlays for posting it up first:




You can download the .pdf here. It is clear the bulls are protective of this name, especially given that some of Hovde's analysis was labeled as questionable. Since hedge fund Hovde's short thesis presentation hit the internet, we've now seen three in-depth responses arguing against them.

The bulls clearly believe they've found a winner in GGWPQ. And, you can't fault them. Shares have risen from under $1 now to above $10. As General Growth Properties emerges from bankruptcy, the one question on everyone's mind is: how much is GGWPQ equity worth? We'll have to wait and see, but there have been plenty of educated guesses, that's for sure. For more on their bullish stance on GGWPQ, check out hedge fund Pershing Square's entire presentation on the US mall REIT industry. And of course, here's their original GGWPQ presentation.

Doug Kass' Predictions For 2010

Hedge fund manager, noted short seller, and financial columnist Doug Kass is out with his annual list of predictions for the impending year. We covered his 2009 predictions at the beginning of last year so it's always interesting to see his picks.

One third of his surprises came true in 2003, nearly 50% of them were true in 2004, almost 50% were true for 2007, and 60% of his 2008 surprise predictions came true. Notably, Kass also pegged the bottom in this year's market back in March. However, he didn't truly capture all of the gains as his hedge fund was up 17% for the year last we heard.

Here are his predictions (surprises) for 2010 and keep in mind that he is 'swinging for the fences' here:

1. There is a glaring upside to first-quarter 2010 corporate profits: (up 100% year over year) and first-quarter 2010 GDP (up 4.5%). It grows clear that, owing to continued draconian cost cuts, coupled with a series of positive economic releases and a long list of company profit guidance increases in mid to late January and early February, there is a very large upside to first-quarter GDP (up 4.5%) and, even more important, to S&P profit growth (which doubles!). The upside on both counts is in sharp contrast to more muted growth expectations. While corporate managers, economists and strategists raise earnings per share, full-year growth and S&P target estimates, surprisingly, the U.S. equity market fails to respond positively to the much better growth dynamic, and the S&P 500 remains tightly range-bound (between 1,050 and 1,150) into spring 2010.
2. Housing and jobs fail to revive: An outsized first-quarter 2010 GDP (up 4.5.%) print is achieved despite a still moribund housing market and without any meaningful improvement in the labor market (excluding the increase in census workers) as corporations continue to cut costs and show little commitment to adding permanent employees.
3. The US dollar explodes higher: After dropping by over 40% from 2001 to 2008, the U.S. dollar continued to spiral lower in the last nine months of 2009. Our currency’s recent strength will persist, however, surprising most market participants by continuing to rally into first quarter 2010. In fact, the U.S. dollar will be the strongest major world currency during the first three or four months of the new year.
4. The price of gold topples: Gold’s price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market.
5. Central banks tighten earlier than expected: China, facing reported inflation approaching 5%, tightens monetary and fiscal policy in March, a month ahead of a Fed tightening of 50 basis points, which, with the benefit of hindsight, is a policy mistake.
6. A Middle East peace is upended due to an attack by Israel on Iran: Israel attacks Iran’s nuclear facilities before midyear. An already comatose U.S. consumer falls back on its heels, retail spending plummets, and the personal savings rate approaches 10%. The first-quarter spike in domestic growth is short-lived as GDP abruptly stalls.
7. Stocks drop by 10% in the first half of next year: In the face of renewed geopolitical tensions and reduced worldwide growth expectations, stocks drop as the threat of an economic double-dip grows. Surprisingly, though, the drop in the major indices is contained, and the U.S. stock market retreats by less than 10% from year-end 2009 levels.
8. Goldman Sachs goes private: Goldman Sachs stock drops back to $125 to $130 a share, within $15 of the warrant exercise price that Warren Buffett received in Berkshire Hathaway's late 2008 investment in Goldman Sachs. Sick of the unrelenting compensation outcry, government jawboning and associated populist pressures, Warren Buffett teams up with Goldman Sachs to take the investment firm private. The deal is completed by year-end.
9. Second half 2010 GDP growth turns flat: The Goldman Sachs transaction stabilizes the markets, which are stunned by an extended Mideast conflict that continues throughout the summer and into the early fall. While a diplomatic initiative led by the U.S. serves to calm Mideast tensions, flat second-half U.S. GDP growth and a still high 9.5% to 10.0% unemployment rate caps the U.S. stock market’s upside and leads to a very dull second half, during which share prices have virtually flatlined (with surprisingly limited rallies and corrections throughout the entire six-month period). For the full year, the S&P 500 exhibits a 10% decline vs. the general consensus of leading strategists for about a 10% rise in the major indices.
10. Rate-sensitive stocks outperform; metals underperform: Utilities are the best performing sector in the U.S. stock market in 2010; gold stocks are the worst performing group, with consumer discretionary coming in as a close second.
11. Treasury yields fall: The yield of the 10-year U.S. note drops from 4% at the end of the first quarter to under 3% by the summer and ends the year at approximately the same level (3%). Despite the current consensus that higher inflation and interest rates will weigh on the fixed-income markets, bonds surprisingly outperform stocks in 2010. A plethora of specialized domestic and non-U.S. fixed-income exchange-traded funds are introduced throughout the year, setting the stage for a vast speculative top in bond prices, but that is a late 2011 issue.
12. Warren Buffett steps down: Warren Buffett announces that he is handing over the investment reins to a Berkshire outsider and that he plans to also announce his in-house successor as chief operating officer by Berkshire Hathaway annual meeting in 2011.
13. Insider trading charges expand: The SEC alleges, in a broad-ranging sting, the existence of extensive exchange of information that goes well beyond Galleon’s Silicon Valley executive connections. Several well-known long-only mutual funds are implicated in the sting, which reveals that they have consistently received privileged information from some of the largest public companies over the past decade.
14. The SEC launches an assault on mutual fund expenses: The SEC restricts 12b-1 mutual fund fees. In response to the proposal, asset management stocks crater.
15. The SEC restricts short-selling: The SEC announces major short-selling bans after stocks sag in the second quarter.
16. More hedge fund tumult emerges: Two of the most successful hedge fund managers extant announce their retirement and fund closures. One exits based on performance problems, the other based on legal problems.
17. Pandit is out and Cohen is in at Citigroup: Citigroup’s Vikram Pandit is replaced by former Shearson Lehman Brothers Chairman Peter Cohen. Cohen replaces a number of senior Citigroup executives with Ramius Partners colleagues. Sandy Weill rejoins Citigroup as a senior consultant.
18. A weakened Republican party is in disarray: Sarah Palin announces that she has separated from her husband, leaving the Republican party firmly in the hands of former Massachusetts Governor Mitt Romney. An improving economy in early 2010 elevates President Obama’s popularity back to pre-inauguration levels, and, despite the market’s second-quarter decline, the country comes together after the Middle East conflict, producing a tidal wave of populism that moves ever more dramatically in legislation and spirit. With the Democratic tsunami (part deux) revived, the party wins November midterm elections by a landslide.
19. Tiger Woods makes a comeback: Tiger Woods and his wife reconcile in early 2010, and he returns earlier than expected to the PGA Tour. After announcing that his wife is pregnant with their third child, both the PGA Tour’s and Tiger Woods’ popularity rise to record levels, and the golfer signs a series of new commercial contracts that insure him a record $150 million of endorsement income in 2011.
20. The New York Yankees are sold to a Jack Welch-led investor group: The Steinbrenner family decides, for estate purposes, to sell the New York Yankees to a group headed by former General Electric Chairman Jack Welch.
    

Intriguing picks from Kass as always as many of you are already shaking your head in disbelief or nodding in agreement with certain predictions of his. For some more pertinent ideas, check out the top ten investment themes for 2010. There are a few predictions concerning hedge funds on Kass' list and we'd agree that insider trading charges are certain to expand. When you have Raj Rajaratnam's Galleon Group being taken down and questions surrounding Steven Cohen's SAC Capital, you know the SEC isn't messing around anymore.

Kass also opines that more hedge fund 'tumult' will emerge and we could agree with that premise as well, given all the insider trading hoopla as of late. He also feels a major fund will shut down due to poor performance too. There are always funds shutting down each year due to poor performance, but we'll have to wait and see if any major players fall victim. Lastly, Kass mentions that the SEC could possibly restrict short selling, a decision that would wildly impact the hedge fund industry no doubt.

For more from Kass, here's the Barron's article outlining his predictions in-depth. For more on Kass' hedge fund, including his decision to introduce long investments at his previously short biased fund, head over to his interview with Barron's. Make sure to also see how well Kass did with his surprises for 2009 now that the year is coming to an end and also his list of signs needed for a market recovery.

Jeff Saut's 2010 Outlook: Market Turning Point?

We're back with the weekly investment strategy from Raymond James' chief investment strategist Jeff Saut. (If you missed his previous commentary you can check out last week's here). This week Raymond James turns their focus to their 2010 outlook. Saut identifies the first half of this 2009 rally has been spurred by liquidity while the second half of the rally has arguably ben driven by improving fundamentals. Saut believes 2010 could be a different story though as stock selection and market timing will need to be used in order to outperform.

The 68% rally from the lows in March is quite a spectacle and Saut duly notes that such a monster rally eliminates some margin of safety. Not to mention, he feels we'll see some headwinds in 2010 largely due to rising taxes, decreased stimulus efforts, and difficult earnings comparisons for companies. Saut also believes that inflation fears will start to pick up, thus leading to interest rate fears. Interestingly enough, Saut also feels the US dollar will continue to strengthen. The constant downtrend in the currency that has all of a sudden been followed by a strong rally has given many people pause for reconsideration. Is it merely a counter trend rally or is this a true reversal?

Saut and his Raymond James team have laid out some themes to play in 2010, writing: "Further, in 2010 we think investors should be positioned for: Sovereign balance-sheet risk (potential defaults: Venezuela, Ukraine, Argentina, Pakistan, Latvia, etc.), increased geopolitical threats; Asian urbanization, a potential commercial real estate crisis; rising taxation/inflation/regulation; the emerging and frontier market consumer; rising global growth, free cash flow beneficiaries; energy and alternative energy; infrastructure plays (electricity, water, etc.); technology (read: volume monetizers); US exports and business spending; dividends; and a return to active portfolio management."

Embedded below is Jeff Saut's entire weekly investment strategy for your perusal:




Also, you can download the .pdf here. Interesting thoughts from Saut and his Raymond James team as they examine themes for 2010. For more on positioning for the new year, check out the top ten investment themes for 2010. We detail Saut's investment strategy each week and you can check out his market commentary from last week, as well as his thesis that the market will end the year higher.

Chase Coleman's Tiger Global: Portfolio Update (13F Filing)

This is the third quarter 2009 edition of our hedge fund portfolio tracking series. If you're unfamiliar with tracking hedge fund movements or SEC filings, check out our series preface on hedge fund 13F filings.

The next hedge fund in our series is Chase Coleman's Tiger Global. Coleman is a 'Tiger Cub' because he learned to ply his trade under mentor Julian Robertson at Tiger Management. However, Coleman is also a 'Tiger Seed' in that he is one of the few managers that Robertson actually seeded himself in an effort to recognize talent. Tiger Global is one of the hedge funds that comprises the Tiger Cub Portfolio created with Alphaclone where you can replicate their positions and enjoy 15.5% annualized returns since 2000.

Here's some Wall Street trivia for you: Which hedge fund manager is a descendant of Peter Stuyvesant, the man who built the wall that gave Wall Street its name? Yep, Chase Coleman. Chase attended Williams College and his focus in the markets has always been on smaller cap names and on technology. Although, he has since expanded his horizons. In 2007, Tiger Global returned 70%, and from 2001-2007 Coleman returned 47% on average. This year started off rough for Tiger as financial and REIT short positions hurt portfolio performance, something they talked about in a past investor letter. In terms of recent portfolio activity out of Tiger, we've seen them selling Longtop Financial shares for quite some time now.

Keep in mind that the positions listed below were Tiger's long equity, note, and options holdings as of September 30th, 2009 as filed with the SEC. We don't cover every single portfolio maneuver, as we instead focus on all the big moves. All holdings are common stock unless otherwise denoted.


Some New Positions
Brand new positions that they initiated last quarter:
PepsiCo (PEP)
Monsanto (MON)
Yahoo (YHOO)
Electronic Arts (ERTS)
McDonalds (MCD)
Airvana (AIRV)


Some Increased Positions
Positions they already owned but added shares to:
Discovery Communications (DISCA): Increased position by 137.7%
ETrade Financial (ETFC): Increased by 80%
Cablevision (CVC): Increased by 2.8%
Transdigm (TDG): Increased by 25.4%
Qualcomm (QCOM): Increased by 22.3%


Some Reduced Positions
Stakes they sold shares in but still own:
Gushan (GU): Reduced position by 55.3%
Longtop Financial (LFT): Reduced by 52%
Priceline (PCLN): Reduced by 40%
Advisory Board Company (ABCO): Reduced by 35.4%
American Tower (AMT): Reduced by 31%
Apple (AAPL): Reduced by 29.3%
Teradata (TDC): Reduced by 27.4%
Visa (V): Reduced by 21.8%
Lorillard (LO): Reduced by 12%


Removed Positions
Positions they sold out of completely:
Philip Morris International (PM)
Gymboree (GYMB)
Partnerre (PRE)
Crown Holdings (CCK)
Broadridge (BR)
Altria Group (MO)
Green Mountain Coffee Roasters (GMCR)
Cognizant Technology (CTSH)
JPMorgan Chase (JPM)
Netezza (NZ)
Solarwinds (SWI)


Top 15 Holdings by percentage of assets reported on 13F filing

1. Mastercard (MA): 10.31%
2. Google (GOOG): 10.02%
3. Lorillard (LO): 8.06%
4. Pepsico (PEP): 6.87%
5. Visa (V): 5.91%
6. Transdigm (TDG): 5.85%
7. Priceline (PCLN): 5.45%
8. Mercadolibre (MELI): 5.23%
9. Monsanto (MON): 5.12%
10. American Tower (AMT): 4.18%
11. Longtop Financial (LFT): 4.17%
12. Yahoo (YHOO): 4.04%
13. Discovery Communications (DISCK): 3.31%
14. Qualcomm (QCOM): 3.27%
15. Cablevision (CVC): 2.82%
    

Notable moves in hedge fund Tiger Global's portfolio include starting a brand new stake in PepsiCo (PEP) and bringing it up to their fourth largest holding. This could possibly be arbitrage driven as John Paulson's hedge fund Paulson & Co detailed some Pepsi arbitrage in their investor letter. Additionally, Tiger's new stakes in Yahoo (YHOO) and Monsanto (MON) were pretty sizable and are worth mentioning as well. Their position in Priceline (PCLN) certainly fared well for them as shares have risen sharply over the past few months. As such, they've reduced their position in it by 40%.

Another change worth mentioning is their continued selling of Longtop Financial. We've detailed those sales right after they've happened given that Tiger had to file amended 13D's on this position each time a major sale took place. They also sold off nearly a third of their American Tower (AMT) position and we mention this because shares of AMT have been a favorite stock amongst hedge funds, and particularly amongst Tiger Cub hedge funds. The only major position they sold completely out of was Philip Morris (PM), but even that was only a marginal position for them in the past, at 2.89% of the portfolio previously.

Assets from the collective holdings reported to the SEC via 13F filing were $2.38 billion this quarter compared to $2.15 billion last quarter. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. Also, please again note that these positions were as of September 30th so two months have elapsed and they've undoubtedly shifted around their portfolio since then.

This is just one of the 40+ prominent funds that we'll be covering in our Q3 2009 hedge fund portfolio series. We've already covered Seth Klarman's Baupost Group Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Dan Loeb's Third Point LLC, David Einhorn's Greenlight Capital, John Paulson's firm Paulson & Co, Lee Ainslie's Maverick Capital and Andreas Halvorsen's Viking Global so check back daily as we'll be covering new hedge fund portfolios.

Hedge Fund BlueGold's Investor Letter (November)

This is the first time we've covered BlueGold Capital Management so here's their background: Founded by Pierre Andurand and Dennis Crema, BlueGold is a London based hedge fund that trades in commodities markets, primarily in oil derivatives. Before founding the firm, they were both senior oil traders at Vitol S.A. and they seek absolute returns "through discretionary fundamental trades, directional and relative-value." They were up a whopping 209.4% for 2008, a year in which many other hedge funds struggled. Year to date for 2009, BlueGold is up 59.8%. Given that BlueGold primarily trades crude oil, we'd be remiss if we didn't include a technical look at crude oil for reference.

Their November investor letter provides some interesting commentary on the economy on a macro level. Specifically, their macroeconomic thoughts are pinpointed in a few main talking points. Firstly, Stephen Jen (the author of this section of the letter) feels that the world will gradually recover and should continue on this course at least until next summer. He feels recent risks such as Dubai's crisis are more-so a temporary distraction rather than a fundamental problem that will begin a wave of sovereign defaults.

This is interesting because it is in stark contrast to thoughts of fellow hedge fund manager Kyle Bass of Hayman Advisors. We've previously covered Bass' prediction of massive sovereign defaults. So we'll have to see who ends up right in this regard, Bass or Jen. Keep in mind that as far as we know, Jen doesn't have any positions on in the sovereign arena, while Bass has been betting on sovereign defaults in his hedge fund.

There are a few more bullet points worth highlighting in BlueGold's commentary as we see that Jen feels that global economic data has been and will continue to be broadly constructive. He also believes that the Fed will not use interest rates to keep asset prices in check. Overall, a much less pessimistic view than what we have seen from other hedge funds. Check out Stephen Jen & BlueGold Capital Management's in-depth macro thoughts via their November investor letter below:

*Update: The document has been removed per the request of representatives from BlueGold. Sorry for any inconvenience.


We'll continue to cover intriguing hedge fund portfolio movements and investor letters. In the mean time, we've just recently outlined hedge fund Woodbine Capital's thoughts on gold and highly recommend reading it given all the buzz around the precious metal lately.

Don Coxe's Basic Points: December 2009

Thanks to zero hedge for posting up Don Coxe's Basic Points for December 2009. He is a strategist for BMO Capital Markets and has been a big proponent of the agriculture and commodities trade, much like fellow ag-bull Jim Rogers.

We've covered a solid question and answer session with Coxe but haven't posted much else of him so it's about time we played some catch-up. Here is Coxe's Basic Points for this month (Email readers come to MarketFolly to read them):




For related reading, we highly recommend hedge fund Passport Capital's case for agriculture as well as Jim Rogers' thoughts on commodities and agriculture.

Market Set To Head Lower? A Technical Look

Late yesterday Adam put out two more technical analysis videos taking a look at the broader picture by examining the Dow Jones and the Nasdaq. Let's first start with his video on the Dow Jones Industrial Average. He uses two technical tools first by simply drawing a trendline from the highs in 2007 and you'll see on the chart that we are currently bumping right around that downtrend line which should serve as resistance. Things become even potentially more negative on a technical level when he lays out a fibonacci retracement and we see that we are also right around the 50% retracement, typically a very strong level in terms of resistance or support (and in this case, it's resistance).

Lastly, couple this with the fact that the market has been trading sideways in a box for the past month and you've got all the components for a large move coming. Adam thinks this consolidation will lead to a move lower in the markets. He points to the divergence in the MACD as cause for concern. The MACD has been downtrending for the past month or so while the market essentially trades sideways. Such a divergence does not typically signify good things to come. Either way though, just play the trading range we've established in the Dow Jones. If it breaks out above the 10,500 level then it's probably heading higher. However, if it breaks down below support around 10,285 then watch out below. And if we break lower, Adam has set 10,100 and even 10,000 as downside price targets. Click the chart below to see his technical analysis on the stock market.



Secondly, he also analyzes the Nasdaq in his other video. By drawing the fibonacci retracement tool again he says we're now in "thin air" in the Nasdaq as we float between the 50% retracement and the 61.8% retracement. He thinks that the longer the Nasdaq dawdles in this area, the weaker it gets. Adam highlights 2,059 as a very key level in the Nasdaq as it is the major support level from last month. If the Nasdaq breaks down below that level, then watch out below. Check out the rest of Adam's thoughts on the Nasdaq.

Gold - The Anti-Goldilocks: Thoughts From Hedge Fund Woodbine Capital

Previously this morning we laid out some macro thoughts and portfolio adjustments from hedge fund Woodbine Capital. Next we're examining their in-depth thoughts on gold from their October investor letter in an excerpt entitled, "Gold - The Anti-Goldilocks." Woodbine Capital is a global macro hedge fund firm founded in January by Josh Berkowitz and Marcel Kasumovich, two former executives at George Soros' hedge fund firm, Soros Fund Management. In his three years at Soros, Berkowitz returned an annual average of 34% net of fees. They are already closed to new investors as they started with $185 million and now have $2.5 billion in assets under management.

We wanted to present their thoughts on gold today because they offer an intricate and unique perspective on everyone's favorite precious metal. They have owned gold as well as deep out of the money puts on gold. However, they view this position not as a hedge against inflation or deflation, but rather as a part of their theme of stronger emerging market demand.

They argue that, "the fundamental source of strong prices is more likely to be tied to stronger demand from emerging markets, through higher income growth and stronger local exchange rates. We argue there are probably more powerful and much cheaper ways of representing that theme. Of course, another source of higher prices is that all investors wake up with the idea that a small part of their portfolios should be allocated to gold. That's true of any and all assets at any given time - it's called a bubble."

Woodbine then proceeds to examine the three ingredients to a bubble:

1. There is an initial reason for the rise in price. For gold: Weak US dollar, rising investment demand, and ncreased emerging market demand.

2. One-sided exuberance: when both good and bad news is 'good' for the asset and investors don't think the asset will decline. A great example is gold being supported by inflation and deflation cycles.

3. Market prices ignore downside risk. "Perception can be a reality."


So, by all means gold could be argued as a bubble. The hedge fund then goes on to examine gold in-depth by looking at supply and demand, the argument for hedging tail risk, and negative return skews. Instead of summarizing these points, we'll instead present you with the words direct from Woodbine. Embedded below is Woodbine's October investor letter with their commentary, "Gold - The Anti-Goldilocks." RSS & Email readers must come to the Market Folly site in order to read the full letter.




An intricate and well presented look at gold from the folks over at Woodbine Capital. This all comes in the midst of a media frenzy over the precious metal. After all, hedge fund icon John Paulson launched a gold fund and Eric Sprott is launching a physical gold trust. Not to mention, gold hit new highs and then drastically pulled back, causing even more of a frenzy.

All in all though, we've seen a great exchange as various hedge funds present cases both for and against the precious metal as they examine the rationale behind gold's value and its role in a portfolio. For more insight on this commodity, check out hedge fund Sprott's special report on gold, David Einhorn's rationale behind storing physical gold (hedge fund Greenlight Capital), as well as John Paulson's gold thesis. Ah gold... without you, what would we talk about?

Carl Icahn Ramps Up Take-Two Interactive Stake (TTWO)

Well known investor and 'corporate raider' Carl Icahn has filed a 13D with the SEC for his hedge fund Icahn Partners. In it, Icahn discloses a 11.28% ownership stake in Take-Two Interactive Software (TTWO). The filing was made due to activity on December 17th, 2009 and they now own 9,158,479 shares (including underlying call options).

Direct from the SEC filing, here is a breakdown of the prices at which Icahn bought shares and calls on TTWO through his various investment funds:

(click to enlarge)

(click to enlarge)

The majority of their purchase was common stock, however they also purchased 783,479 shares through call options that expire December 16th, 2011 and they have sold European-style put options for the same amount of shares with the same expiry. This is not a new position for Icahn because as of September 30th (per his latest 13F filing), he owned 2,007,445 shares. This means that in the last three months, Icahn has purchased an additional 7,151,034 shares, a 356% increase over their previous stake.

Icahn has filed a 13D which signifies his activist intentions with his stake. And, given Icahn's rabblerousing ways, we'd expect nothing less. His filing claims that he feels shares are undervalued and that he might seek to talk with management. Many analysts believe that Icahn's entrance into such a name means that TTWO will most likely become an acquisition target again as it had previously been subject to advances from fellow gaming firms like Electronic Arts (ERTS).

Carl Icahn runs hedge fund Icahn Partners and focuses on activist investing where he seeks to implement change at various companies. We've covered his movements in-depth here on the blog and in October he laid out the idea to short real estate. In addition, we've also detailed some of his portfolio activity. For investing insight from Carl Icahn, check out his guest lecture at Yale.

Taken from Google Finance, Take Two Interactive is "a global publisher, developer and distributor of interactive entertainment software, hardware and accessories. The Company operates in two segments: publishing and distribution. The publishing segment consists of Rockstar Games, 2K Games, 2K Sports and 2K Play publishing labels. The Company develops, markets and publishes software titles for gaming and entertainment hardware platforms, including Sony’s PLAYSTATION3 (PS3) and PlayStation2 (PS2) computer entertainment systems; Sony’s PSP (PlayStationPortable) (PSP) system; Microsoft’s Xbox 360 (Xbox 360) video game and entertainment system; Nintendo’s Wii (Wii) and DS (DS) systems, and for the personal computers (PC) and Games for Windows. The Company’s distribution segment, which includes its Jack of All Games subsidiary, distributes its products, as well as software, hardware and accessories produced by others to retail outlets in North America."

Woodbine Capital Sees Possible Early Cycle Slowdown

Yesterday we got word that Paul Tudor Jones' main hedge fund BVI Global had stopped accepting new investments. From the market lows of this year to July, Tudor Investment Corp saw $1.3 billion in inflows and they've decided that they've reached an ideal capacity for now. While Tudor is a well known hedge fund with a storied past, we also want today to focus on another hedge fund that recently stopped accepting money as well.

Woodbine Capital is a hedge fund firm founded by two ex-Soros Fund Management players Josh Berkowitz and Marcel Kasumovich, as well as three other partners. George Soros' former executives launched their new fund in January with only $185 million and they already have $2.5 billion in assets under management. They have reached their initial target AUM and as such have stopped accepting new investments as of November 3rd. As of the end of October they were up 13.07% for the year. They employ a global macro strategy ala Soros Fund Management as they seek to play various trends by trading in all kinds of markets.

We recently got a glimpse as to what themes they will be watching going forward in their October letter to investors. Woodbine has made three main adjustments to their portfolio:

1. "The global housing theme is removed."
2. "Deeper emerging market demand/credit and fiscal consolidation are reduced to marker positions."
3. "Bullish fixed income exposure is raised in our themes of policy cooperation and exit strategies."

They then expand upon their #3 adjustment by saying that, "Regions that were early to exit from very accomodative monetary stimulus are priced for the gradual return to normal interest rates; the long workout in the US will encourage lower global real yields for a longer period and the risk premium in those markets is an opportunity."

Woodbine actually highlights a prudent point that while the global recession has just ended, we are possibly facing an early-cycle slowdown. They attribute this to the fact that the initial surge/recovery was driven largely by fiscal and monetary stimulus. But now that the supporting cast is slowly exiting stage right, inventories are starting to build again and everyone is focusing on demand. Woodbine anticipates that such an early cycle slowdown would put a damper on the potential rise in risk assets. In order to resolve the uncertainty they outline two scenarios:

1. "Global policy response encourages a rebalancing of demand away from the US"

or

2. "The world remains stubbornly tied to US demand, which grows at a very slow pace."

Their portfolio is reflective of such growth uncertainty given that their VaR (Value at Risk) is near the lowest levels since their inception. Overall, interesting thoughts from Berkowitz and Kasumovich's fund. Woodbine also laid out an in-depth look at the most talked about precious metal in a section entitled, Gold : The Anti-Goldilocks, which we've covered this morning in a separate post. For more updates from prominent hedge fund managers, head over to our hedge fund tracking series.

What We're Reading ~ 12/18/09

Latest portfolio moves from PIMCO's Bill Gross [zero hedge]

Further evaluating General Growth Properties equity [Distressed Debt Investing]

John Paulson may not be one hit wonder [NY Mag]

First art hedge fund calls it quits [FINalternatives]

Might be time to re-evaluate your risk tolerance [World Beta]

An energy analyst's take on the Exxon-XTO deal. Exxon faces reality. [Gregor.us]

Freight traffic: a sign of no recovery? [Pragmatic Capitalist]

In year of investing dangerously, Warren Buffett looked into the abyss [Wall Street Journal]

Thoughts on the long-term equity cycle [Credit Trader]

Steven Cohen's wife claims he made money on insider trading (SAC Capital) [NY Times]

Taking A Look At Gold, the US Dollar, & Crude Oil

The guys over at MarketClub just put out three interesting videos covering three hot topics: gold, the US dollar, and crude oil. Let's first start with their coverage of crude oil since it's trading near a crucial level.

Crude Oil

Firstly, Adam checks out the crude oil market and right off the bat he highlights that while crude has been in an overall uptrend since March of this year, the recent decline could be worrisome. He specifically notes the $67 level as crucial seeing how that was the most recent level of major support back in late September. While crude initially traded higher from thos levels, it has since spiraled down and is getting close to testing support. If it takes out $67 to the downside, Adam notes that you should exit the market as support will have broken. You should also note that Adam previously identified a pattern in crude oil where it is sold off every 75 days or so and then was bought right back up again. We're in the midst of one of those downtrend areas right now and buying needs to come in for this pattern to remain in tact. If crude heads lower, it will have breached a support level and nullified this patterned uptrend as well, a definite sign to exit the commodity. Click the chart below to watch the crude oil analysis.




Gold

Secondly, you can see their technical analysis on gold here. Adam feels that it's best for you to just stay out of the precious metal for now if you're not already in it because of what he calls "silly season." He's referring to the period from December 15th until the new year where many traders and money managers simply take off for the holidays. As such, volume in markets decreases and it only takes a little bit of money to really whipsaw things around. Not to mention, they are seeing conflicting indicators on their screen as the weekly trend is going down but their daily indicators are pointing up. These divergences combined with the lack of market participants over the holidays means it's best to sit on your hands they say.

US dollar

Lastly, you can see their analysis of the US dollar here. The dollar has been in a definitive downtrend over the past few months and their monthly indicators have been bearish since May of this year. Their weekly signals on the other hand, have turned up as the dollar has been rallying as of late. While some may interpret this as bullish, they note that trading against the primary trend (which is still down) is not advisable. We'd tend to disagree with him on this point as illustrated in the chart below you can see that the dollar has clearly broken out of its downtrend (green line) from the past few months. Not to mention, it is now trading above its 50 day moving average (blue line) and both the RSI and MACD are heading higher.



To his credit, Adam highlights the potential divergence in the MACD as its been slowly building higher since June. This means that the dollar is definitely something to keep an eye on in his view, but until the primary trend reverses, he thinks it's best to sit on the sidelines. We're obviously starting to see a common theme here in staying on the sidelines. It's typically not worth the risk of playing around in the anemic holiday markets. Conflicting signals and lack of true trading participants going into the holidays means you should probably avoid getting whipsawed around. Overall, Adam took at a look at some hotly traded assets but conceded that maybe it's best to just not trade them at all until the new year and we can't argue there.